The Challenges of Regulatory Compliance: How Technology Aids


The Challenges of Regulatory Compliance: How Technology Aids

In response to the financial crisis of 2008, a slew of regulatory legislations was put into place to create a favorable environment for investment and improve risk management practices in financial institutions. Ever since, the financial services industry in general and the securities markets, in particular, has been focused on adapting to and implementing the evolving regulatory requirements. And now the COVID pandemic, the effect of which has been quite heterogeneous has heralded a focus shift from otherwise purely risk and operations to cover other areas like:

  • Digitization – Assets and Operations
  • Remote Operation Risks
  • ESG – Environmental, Social and Governance facets
The regulatory authorities are continuously coming up with new legislation and recommendations that cover these facets. With all these changes, regulatory compliance spending will continue to eat up a huge slice of any financial institution’s technology budget. While for larger institutions, the cost of compliance is a burden, for smaller entities, it is a question of sustainability. Technology has been businesses’ best ally for quite a long time now and even in this complex business environment, it continues to provide crucial regulatory compliance solutions to drive efficiency and sustainability across functions. Technological solutions can help make the process of keeping pace with the changes easier. In this blog post, we take the opportunity of shedding light on some of the key challenges facing regulatory compliance and how technology can aid in meeting those challenges.

Varying regulations depending on product, service, or jurisdiction

One of the biggest challenges of complying with regulations is that the requirements vary not only territorially but also significantly from one business to another and even from one product or service to another. For example, the regulations in the US, Europe, Asia-Pac, and the Middle East are created/modified by a plethora of organizations like CFTC/SEC in the US, EU Commission in Europe, Hong Kong’s SFC, and MAS in Singapore, UAE’s SCA and so on. This can make it difficult for businesses to know what they exactly need to do to be super compliant. It also necessitates a lot of research into different regulations, especially in a cross-border scenario.

Constantly updated regulations and rules

Another challenge that businesses face with regulatory compliance is that regulations and rules are constantly being updated. This means that businesses need to be vigilant in monitoring any changes and make sure they are incorporating the latest updates into their compliance procedures. The good news is that several software solutions can help automate this process, making it easier for businesses to stay up-to-date.

Monitoring and applying regulations— a time-consuming process and costly affair

Finally, meeting regulatory compliance can be a complex and expensive process. Not only do businesses need to invest in the necessary technology and software, but they also need to allocate time and resources toward monitoring and applying the regulations. This can be a challenge for smaller businesses that may not have the same resources as larger corporations. Making the right choice of technology platforms is a key to avoiding inefficiencies in staying compliant. Technology has enabled faster, more complex, and higher volume trading which has only increased the pace at which regulatory compliance asks are multiplying. The challenges of regulatory compliance can be daunting, but they can be made easier with fit-for-purpose technology solutions. So if you’re struggling with regulatory compliance, we are here to help. Contact us today to learn more about our compliance and capital market solutions and how they can benefit your business.

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